Emefiele challenges bankers on FX shortage, says CBN will continue its supply

The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, has admitted that there is shortage of foreign exchange to meet genuine import needs of Nigerians and challenged the financial institutions in the country to proffer solution to the problem.

The CBN governor spoke in Lagos at the 2022 Bankers’ Committee Retreat, with the theme, “Increasing the Productive Base of the Nigerian Economy and Non-Oil Export Revenues.”

He also promised that the apex bank would continue to provide dollars support in the market

He said, “We must, in an attempt to walk towards diversifying the nation’s economy, think about how we are less reliant on crude revenues. We are in the business of servicing our customers and servicing customers also entails that they have import needs and they need foreign exchange to conduct their import activities.

“There is a clear shortage of foreign exchange today but yet as bankers, we must meet the needs of our customers. The market is tight and I know we don’t have a choice, we will have to do something to ensure that this problem is solved.

“That is the reason we decided at this retreat to focus on RT200 because essentially, we have to think about how to source foreign exchange for our customer’s needs without necessarily needing to resort to revenues from crude which as we all know has come to zero or almost zero compared to about $3 billion monthly that we were getting in 2014.”

He urged the bankers to think outside the box and try as much as possible to think of how the import needs of customers would be met.

Emefiele added that the global reaction to the evolving circumstances had escalated the threat of hyperinflation, causing central banks in many countries to react with a sharp and extensive monetary tightening in renewed pursuit of price stability and in most cases even at the expense of growth.

He also called for intensity in diversification.

Emefiele said, “In view of the widespread food and cost-of-living crisis, we are seeing growing restrictions on food exports as about 23 advanced economies, according to the World Bank, have banned the export of 33 food items.

“Also, the European Union plans to impose energy price caps on Russian supplies, to curtail the energy crisis caused by the war in Ukraine.

“Most of these actions, including the effects of capital flow reversals and exchange rate pressures, have not only amplified the vulnerabilities of EMDEs, but assertively highlights the need for us to strengthen our domestic economic base, fast-track the attainment of economic diversification, limit our reliance on foreign products, insulate and immunise our economy against foreign shocks.”

Furthermore, on diversification, he said, “It is in view of the need to support the fundamentals of the Nigerian economy, diversify from dependence on oil inflows, and minimise the debilitating pressures in the foreign exchange market that the Central Bank of Nigeria launched the RT200 programme in February 2022.

“This initiative, which is designed to stimulate non-oil exports, with a $200 billion foreign exchange income target in three to five years, has been widely accepted and driven by the institutions that constitute the Bankers’ Committee.

“In order to contribute to national development and economic growth, the Bankers’ Committee must recognise the critical role of the financial system in accelerating the development of the productive base of the economy.

“We must play our productive parts to engender the necessary infrastructure and services that are critical to boosting non-oil exports. The 2022 Bankers’ Committee Retreat provides us with the opportunity to review the progress and impact of the implementation of RT200.

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“It is equally an occasion to re-examine our support for other government programmes to promote non-oil export and to identify specific implementable actions by the financial system to enhance foreign exchange revenues.

“It is against the backdrop of adverse global realities and the current price frailties of the Nigerian economy that I enjoin and challenge all of us at this retreat this morning to deliberate purposefully and discern innovative and sustainable ways to boost the productive base of Nigeria’s non-oil sector.

“We can no longer delay resolving the structural issues inhibiting non-oil export receipts in Nigeria. We must strengthen the immunity and engender the resilience of our economy against exogenous shocks.

“Once again, I reiterate that at this retreat, we must come up with actionable steps to ensure that the Bankers Committee continues to make a meaningful contribution to the growth and development of our dear country.”